TIDMSGRO
RNS Number : 9941P
SEGRO PLC
16 October 2019
16 October 2019
SEGRO plc
Trading Update
SEGRO plc ("SEGRO" or the "Group") today publishes a trading
update for the period from 1 July 2019 to 15 October 2019(1) .
David Sleath, Chief Executive, said:
"The third quarter has seen another period of strong operational
delivery from SEGRO. We have continued to secure high levels of new
rental income both from our existing portfolio and from our active
development programme, in which we have over 1 million sq m of new
space under construction or in advanced discussions. During the
period we also added further land and assets in our core urban
markets, including in London and Paris to support further
growth.
"SEGRO continues to benefit from the structural trends of
urbanisation and technological revolution, and despite the
uncertain macro-economic backdrop at this time, we head into the
final part of the year with confidence. Looking ahead, the
combination of new rental income from the development programme,
compounded with the benefits of active asset management of our
existing portfolio, should enable us to drive sustainable growth in
both earnings and dividends."
Active asset management and high occupier demand driving a
strong operational performance (Appendix 1)
-- We signed contracts worth GBP15.3 million (Q3 2018: GBP12.6
million) of new headline rent(2) during the third quarter, taking
the total for the nine months to 30 September 2019 to GBP48.6
million (9M 2018: GBP52.0 million).
-- Rent roll growth from existing space, net of take-backs was
GBP2.1 million (Q3 2018: GBP5.5 million), taking the nine-month
figure to GBP10.6 million (9M 2018: GBP6.9 million).
-- We have continued to capture reversionary potential from our
portfolio, with new headline rents on review and renewal
approximately 20 per cent higher than previous passing rent in the
nine months to 30 September 2019 (30 June 2019: 12.8 per cent),
reflecting a strong contribution from the Slough Trading Estate and
in our Greater London portfolio.
-- So far in 2019 we have completed 765,900 sq m (9M 2018:
502,200 sq m) of new developments, capable of generating GBP33.7
million (9M 2018: GBP29.7 million) of headline rent, 88 percent of
which has been leased. Developments capable of generating GBP15.1
million of headline rent are expected to complete in the fourth
quarter, GBP12.7 million of which has been secured.
-- The vacancy rate was stable at 4.9 per cent (30 June 2019: 4.8 per cent).
Continued momentum in the pre-let led development pipeline
-- We signed GBP7.7 million (Q3 2018: GBP3.7 million) of new,
unconditional pre-let agreements and lettings of speculative
developments prior to completion. These included pre-lets to online
food retailer Ocado in East London, home improvements retailer
Leroy Merlin on the outskirts of Rome and consumer appliance
retailer TERG in Wroc aw, Poland.
-- At 30 September 2019, 644,000 sq m of space was under
construction, equating to potential future headline rent of GBP46
million (30 June 2019: 459,200 sq m, GBP36 million) of which 63 per
cent has been secured (30 June 2019: 65 per cent). Once complete
and fully let, the pipeline is expected to generate a yield on
total development cost of approximately 7 per cent.
-- We remain on course to invest around GBP600 million in our
development pipeline (including land, infrastructure and
construction) in 2019 as a whole.
Finding opportunities to add to our portfolio and land bank in
attractive markets (Appendices 2 and 3)
-- During the third quarter we invested GBP78 million in urban
warehouse asset acquisitions. Included in this were two off-market
acquisitions in London, one in the East and the other in the South.
We also made two further acquisitions in Lyon, helping us to build
scale in this attractive, supply-constrained market.
-- We also invested GBP77 million in our land bank during the
period, helping to create development opportunities in the very
attractive urban markets of London and Paris, including the
acquisition of eight acres of land in Tottenham, North London, on
which we expect to construct 19,000 sq m of urban warehousing. We
also acquired fourteen acres of land for an urban warehousing
project close to Ingolstadt in Southern Germany.
-- Disposals during the quarter at GBP16 million were modest.
They included land and assets in Gdansk, a market we have now
exited, allowing us to focus on building scale in other Polish
markets such as the key logistics hub of Wroc aw, where a number of
recent investments have been made. So far in 2019 we have disposed
of GBP122 million of assets and land (9M 2018: GBP192 million).
Balance sheet positioned to support further development-led
growth
-- Net debt (including our share of debt in joint ventures) at
30 September 2019 was GBP2.7 billion (30 June 2019: GBP2.4
billion), equating to a pro forma(3) look-through LTV of 27 per
cent (30 June 2019: 24 per cent).
-- Approximately 36 per cent of the interim dividend was paid as
scrip, resulting in the issue of 3.3 million new shares during the
quarter. Earnings per share for 2019 are expected to be based on an
average of 1,081 million shares.
Financial calendar
The 2019 full year results will be published on Friday 14
February 2020.
(1) In this statement, space is stated at 100 per cent, whilst
financial figures are stated reflecting SEGRO's share of joint
ventures. Financial figures are stated for the period to, or at, 30
September 2019 unless otherwise indicated. The exchange rate
applied is EUR1.13:GBP1 as at 30 September 2019.
(2) Headline rent is annualised gross passing rent receivable
once incentives such as rent free periods have expired.
(3) Based on values at 30 June 2019, adjusted for acquisitions,
disposals and other capital expenditure during the third
quarter.
Appendices
1. Leasing data for the period to 30 September(1 2)
Q3 2019 Q3 2018 9M 2019 9M 2018
----------------------------------------------------------------------------- -------- -------- -------- --------
Take-up of existing space (A) GBPm 2.8 4.2 9.5 10.1
Space returned(2) (B) GBPm (4.2) (2.7) (8.4) (9.5)
NET ABSORPTION OF EXISTING SPACE (A-B) GBPm (1.4) 1.5 1.1 0.6
Other rental movements (rent reviews, renewals, indexation) (C) GBPm 3.5 4.0 9.5 6.3
RENT ROLL GROWTH FROM EXISTING SPACE GBPm 2.1 5.5 10.6 6.9
Take-up of developments completed in the period - pre-let space (D) GBPm 1.7 8.5 25.7 20.3
Take-up of speculative developments completed in the past two years
(E) GBPm 2.2 0.7 8.3 4.0
TOTAL TAKE UP (A+C+D+E) GBPm 10.2 17.4 53.0 40.7
Less take-up of pre-lets and speculative lettings signed in prior
periods GBPm (2.6) (8.5) (27.3) (22.5)
Pre-lets and lettings on speculative developments signed in the
period for future delivery GBPm 7.7 3.7 22.9 33.8
RENTAL INCOME CONTRACTED IN THE PERIOD(2) GBPm 15.3 12.6 48.6 52.0
Take-back of space for redevelopment GBPm (0.3) (0.1) (0.3) (0.3)
---------------------------------------------------------------------- ------ -------- -------- -------- --------
1 All figures reflect headline rent (annualised gross rental
income, after the expiry of any rent-free periods), exchange rates
at 30 September and include joint ventures at share.
2 Excluding space taken back for redevelopment.
2. Acquisitions completed during the three months to 30 September 2019
Asset location / type Purchase price(1) Net initial Topped-up
yield
(GBPm, SEGRO (%) net initial yield(2)
share) (%)
------------------------------------- ----------------- ----------- ----------------------
UK: Urban warehouses 64.1 3.9 3.9
Continental Europe: Urban warehouses 13.4 5.7 5.7
UK: Land 37.0 n/a n/a
Continental Europe: Land 39.6 n/a n/a
Total acquisitions during the
quarter 154.1 4.2(3) 4.2(3)
------------------------------------- ----------------- ----------- ----------------------
1 Excluding acquisition costs; purchase price reflects exchange
rate at 30 September 2019 and includes joint ventures at share.
2 Topped up net initial yield includes rent due after expiry of
rent-free periods.
3 Yield excludes land acquisitions.
3. Disposals completed during the three months to 30 September 2019
Asset location / type Gross proceeds(1) Net initial Topped-up
yield
(GBPm, SEGRO share) (%) net initial yield(2)
(%)
---------------------------- -------------------- ----------- ----------------------
Continental Europe: Big box
warehouse 12.4 6.6 6.6
Continental Europe: Land 3.4 n/a n/a
Total disposals during the
quarter 15.8 6.6 6.6
---------------------------- -------------------- ----------- ----------------------
1 Proceeds reflect exchange rate at 30 September 2019 and
include joint ventures at share.
2 Topped up net initial yield includes rent due after expiry of
rent-free periods.
CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:
SEGRO Soumen Das (Chief Financial Officer) Tel: +44 (0) 20 7451
9110
--------------
Claire Mogford (Head of Investor Relations) Tel: +44 (0) 20 7451
9048
--------------
Gary Gaskarth (External Communications Tel: +44 (0) 20 7451
Manager) 9130
-------------- ------------------------------------------- --------------------
FTI Consulting Richard Sunderland / Claire Turvey Tel: +44 (0) 20 3727
/ Eve Kirmatzis 1000
-------------- ------------------------------------------- --------------------
This Trading Update, the most recent Annual Report and other
information are available on the SEGRO website at
www.segro.com/investors.
Neither the content of SEGRO's website nor any other website
accessible by hyperlinks from SEGRO's website are incorporated in,
or form part of, this announcement.
Forward-Looking Statements:
This announcement contains certain forward-looking statements
with respect to SEGRO's expectations and plans, strategy,
management objectives, future developments and performances, costs,
revenues and other trend information. These statements are subject
to assumptions, risk and uncertainty. Many of these assumptions,
risks and uncertainties relate to factors that are beyond SEGRO's
ability to control or estimate precisely and which could cause
actual results or developments to differ materially from those
expressed or implied by these forward-looking statements. Certain
statements have been made with reference to forecast process
changes, economic conditions and the current regulatory
environment. Any forward-looking statements made by or on behalf of
SEGRO are based upon the knowledge and information available to
Directors on the date of this announcement. Accordingly, no
assurance can be given that any particular expectation will be met
and SEGRO's shareholders are cautioned not to place undue reliance
on the forward-looking statements. Additionally, forward-looking
statements regarding past trends or activities should not be taken
as a representation that such trends or activities will continue in
the future. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the
Disclosure and Transparency Rules of the Financial Conduct
Authority), SEGRO does not undertake to update forward-looking
statements to reflect any changes in events, conditions or
circumstances on which any such statement is based. Past share
performance cannot be relied on as a guide to future performance.
Nothing in this announcement should be construed as a profit
forecast. The information in this announcement does not constitute
an offer to sell or an invitation to buy securities in SEGRO plc or
an invitation or inducement to engage in any other investment
activities.
Neither the content of SEGRO's website nor any other website
accessible by hyperlinks from SEGRO's website are incorporated in,
or form part of, this announcement.
About SEGRO
SEGRO is a UK Real Estate Investment Trust (REIT), and a leading
owner, manager and developer of modern warehouses and light
industrial property. It owns or manages 7.8 million square metres
of space (84 million square feet) valued at GBP11.7 billion serving
customers from a wide range of industry sectors. Its properties are
located in and around major cities and at key transportation hubs
in the UK and in eight other European countries.
See www.SEGRO.com for further information.
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
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